Michigan's improving economy likely will bring in hundreds of millions of dollars in additional revenue this year and next, the House and Senate fiscal agencies said Friday.
The House Fiscal Agency warned, however, that the new business tax cut just enacted will cut revenue in the budget year that starts Oct. 1 and that about $77 million of this year's surplus likely will have to be used to fill the resulting hole.
"Overall revenues are up, but the tax proposal that was just enacted will wipe out a portion of those increases," HFA deputy director Mary Ann Cleary told The Associated Press.
The HFA is predicting a surplus of $483.7 million for the general and School Aid fund. The Senate Fiscal Agency comes in at $690.5 million. And remember, we went into this with a current surplus in the school fund that Republicans raided and sent to other parts of the budget - meaning that we didn't have to make that $1.1 billion in cuts to schools at all. But hey, what good is that nifty expanded emergency financial manager law if we don't get a chance to use it?
State budget director John Nixon says he's pleased by the expected rise in tax dollars, but warned against heeding calls from Democratic lawmakers to use the extra funds to beef up spending on areas such as education rather than one-time costs.
"Our recommended budget not only gets us truly balanced in 2012, but in 2013 as well," he said. "Decisions to build the 2012 budget with any 2011 surplus would jeopardize that strong position, and only serve to delay needed decisions by another year."
"Needed decisions" being the code words for "putting the squeeze on the poor, the sick, the seniors, the kids, the teachers and the public employee unions so we can take that money and give it to our rich friends". That's the decision Republicans "needed" to make to keep their campaign donors happy. The Chamber of Commerce bought our government, see, and they want an instant return on their investment. Did you expect the shareholders of Michigan, Inc. to wait for their dividends? Don't be silly.
GOP House Speaker Jase Bolger admits that Republicans have already spent our future on tax cuts for business. Sorry kids.
"The temptation to spend unanticipated money will be strong, but we cannot forget that we have a duty to be fiscally responsible," he said in a release. "We need to stop the past practice of using one-time money to prop up ongoing spending."
"One-time money" is an admission that they do not expect the Republican tax plan to bring the needed revenue for public services into our state coffers. Get that? In one sentence, Bolger unwittingly destroys the entire trickle-down theory that business tax cuts will bring us prosperity - and your schools are going to pay for it.
The House Fiscal Agency's numbers show the business tax cut hitting the school aid fund hard, dropping revenue by nearly $670 million in the next budget year compared to what state economists expected in January. That would leave school aid revenue at $10.7 billion for the 2011-12 fiscal year. The agency expects total general fund revenue to be $7.8 billion.
Bottom line: At this point in time, Michigan is showing signs of a robust recovery even with our current tax structure, and the Republicans are going to gut our state services and spend it all on business tax cuts anyway. Now, chances are public pressure will force them to put some of this surplus towards K-12, but they have admitted that this is probably a one-time shot - because their idea of "fiscal responsibility" is to exacerbate our deficit problem with cuts to revenue.
Sad thing is, people don't follow this close enough to understand that they are being ripped off. You would think that after thirty years of trickle-down economics we would have caught on to the ruse by now.
UPDATE 5/16: And the winning number is...
Michigan’s treasury will have $429 million more revenue to spend this fiscal year than was expected earlier this year, state economists agreed today.
But a projected $499 million windfall for next year could be largely eaten up by a new tax system awaiting Gov. Rick Snyder's signature.
Again the term "one time windfall" came up, meaning that Republicans don't have any confidence that the new business tax structure will adequately cover any improvements or restoration of education and other funding to our state. Enjoy your diminished services...